Final CNS AR 2020 - Flipbook - Page 31
Although the full extent of the foregoing regulatory changes is still unclear, they may affect our business operations and
increase our operating expenses.
Our involvement in legal proceedings could adversely affect our results of operations and financial condition.
Many aspects of our business involve risks of legal liability. Claims against us may arise in the ordinary course of
business, including employment-related claims, and from time to time, we may receive subpoenas or other requests for
information from various U.S. and non-U.S. governmental or regulatory authorities and third parties in connection with
certain industry-wide, company-specific, or other investigations or proceedings. In addition, certain funds we manage may
become subject to lawsuits, any of which could potentially impact the investment returns of the applicable fund.
We carry insurance in amounts and under terms that we believe are appropriate to cover potential liabilities related to
litigation. However, we cannot guarantee that our insurance will cover all liabilities and losses to which we may be exposed,
or that our insurance policies will continue to be available at acceptable terms and fees. As our insurance policies are due for
renewal, we may need to assume higher deductibles or pay higher premiums, which would increase our expenses and reduce
our net income.
The tax treatment of certain of our funds involves the interpretation of complex provisions of U.S. federal
income tax law for which no precedent may be available and may be subject to potential legislative, judicial or
administrative change and differing interpretations, possibly on a retroactive basis.
The U.S. federal income tax treatment of certain of our funds depends in some instances on determinations of fact and
interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be
available. U.S. federal income tax rules are constantly under review by the IRS and the U.S. Department of the Treasury,
frequently resulting in revised interpretations of established concepts, statutory changes, revisions to regulations, and other
modifications and interpretations. Recent and ongoing changes to U.S. federal income tax laws and interpretations thereof
could cause us to change our investments and commitments, affect the tax considerations of an investment in us and our
funds, and change the character or treatment of portions of our income. In addition, the Company may be required to make
certain assumptions when electing a particular tax treatment. It is possible that the IRS could assert successfully that the
assumptions made by us do not satisfy the technical requirements of the Internal Revenue Code and/or Treasury Regulations
and could require items of income, gain, deduction, loss or credit, including interest deductions, be adjusted, reallocated, or
disallowed in a manner that adversely affects us and our clients.
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